Street Signs: BAFs most popular hybrid funds, Sebi's next move, and more

BAFs: Heads you win; tails you don't lose

Balanced advantage funds (BAFs) could soon be back in the reckoning amid concerns about expensive valuations and stocks recording new highs. BAFs, which have seen net outflows for seven of the eight months between October and May, had emerged as investor favourites the last time markets were scaling new highs in the second half of 2021. Distributors say BAFs and other hybrid funds are good investment options to park booked profits in equity schemes in such periods. Some distributors say this time, too, they are advising investors, especially those who might need the money in a year or two, to shift a portion of their equity corpus to debt or hybrid schemes, depending on their risk appetite. BAFs are the most popular hybrid funds.

Taking stock: Levelling the exchange playing field

The National Stock Exchange (NSE) has been the dominant exchange for over two decades now. However, regulators are of the view that it is in everyone’s best interest to have more than one successful exchange, even as the ‘network effect’ will continue to favour the strongest player. Securities and Exchange Board of India (Sebi) Chairperson Madhabi Puri Buch recently said that the capital markets regulator has lined up half a dozen initiatives to ensure a more level playing field in the stock exchange space. The watchdog’s objective is to reduce concentration risk and safeguard the market ecosystem from cybersecurity risks and technology failures. Last week, the NSE had to roll back its decision to move the Bank Nifty derivatives settlement from Thursday to Friday. The move was to counter BSE’s decision to opt for Friday for the expiry of its relaunched Sensex and Bankex derivatives, which are beginning to break the NSE’s dominance in derivatives. Earlier, Sebi had issued a diktat to brokers to offer trading preferences to traders and investors on all exchanges. The Street will be keenly keeping tabs on Sebi’s next move.

Big gains, but a slim chance

The recently-concluded initial public offerings (IPOs) of both ideaForge Technology and Cyient DLM witnessed blockbuster demand, with total bids exceeding Rs. 50,000 crore. If grey market premiums are anything to go by, ideaForge is expected to gain over 70 per cent and Cyient close to 40 per cent on the day of listing, which is likely to be July 10. Retail investors have applied in retail as well as small high networth individual (SHNI) categories. Those applying in retail and SHNI categories can get allotments to shares worth in the region of Rs. 15,000 and Rs. 2 lakh, respectively. However, given the oversubscription, it will be a game of sweepstakes. Industry players say the chances of allotment in ideaForge IPO are 1 in 60, while those in Cyient are 1 in 40.